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COMMISSION’S IMPACT ASSESSMENT

For further information concerning the background to this issue,
please refer to the summary of the Commission’s initial proposal of 12 July
2005 for a Council Directive introducing measures aimed at ensuring the
enforcement of intellectual property rights – COM(2005)0276.

Note: This document refers to a
package of 2 proposals tabled by the Commission dealing with: 1) the
introduction of measures aimed at ensuring the enforcement of intellectual
property rights and 2) a strengthening of the
criminal law framework to combat intellectual property offences.
(Please refer to summary of procedure CNS/2005/0128).

1- POLICY OPTIONS AND IMPACT

The Commission examined four
potential policy options.

1.1- Option
1: Leaving the approximation of penal measures up to the discretion of Member
States, while promoting awareness among consumers of the damage caused by
counterfeiting and piracy. This first option
consists of combating the demand for counterfeit or pirated products by
creating awareness among consumers, in particular by organising information
campaigns against counterfeiting. However, even if an awareness campaign is
very useful not to mention necessary, it cannot on its own be considered to
constitute a policy combating counterfeiting.

1.2- Option
2: Action at international level. Counterfeiting
and piracy are phenomena that have been the focus of attention of a certain
number of international organisations which contribute to the combat against
counterfeiting. The best known manifestation of this work undertaken at
international level is the TRIPS agreement which lays down minimum provisions
on means of enforcing trade-related intellectual property rights concluded on
15 April 1994 and which entered into force on 1 January 1995). However, even
if the majority of WTO members have now adopted legislation aimed at
implementing these minimal standards, the incidence of piracy and piracy has
continued to rise year after year. For some years, other types of actions
have been carried out at international level (for example, the Interpol Intellectual Property Crime Action
Group). The Commission is also involved in various
actions at international level (the adoption on 10 November 2004 of a
strategy aimed at contributing to an improvement of the situation in third
countries). However, if action at international level is required, it has to
be reinforced by internal mechanisms within the Union that are based on high
standards.

1.3- Option
3: take counterfeiting and piracy into account in police and judicial
cooperation texts. Certain cooperation mechanisms
are laid down for certain types of infringements: this involves texts that
seek to improve police and judicial cooperation between the Member States
adopted under Title VI of the TEU. These instruments seek to assist the
fight against serious crime, in particular organized crime. There is the
proposal for a framework decision adopted by the Commission concerning a European evidence warrant aimed at obtaining objects, documents and
data for use in proceedings in criminal matters (see
CNS/2003)0270). However, this could never replace the creation of a
legislative platform on the criminal law front.

1.4- Option
4: introduce a specific instrument to deal with this crime within the Union. To respond effectively to the counterfeiting and piracy
phenomenon within the European Union, two texts could be envisaged to supplement current provisions and, in
particular Directive 2004/48/EC concerning the
enforcement of intellectual property rights: one text under the first pillar
and a second under the third pillar:

- a proposal
for a Directive which could ensure that all intentional
infringements of an intellectual property right on a commercial scale, and
attempting, aiding or abetting and inciting such infringements are treated as
criminal offences. The text is accompanied by various criminal sanctions:
these could include, for individuals, imprisonment and, for both individuals
and legal persons, fines, confiscation of the goods in question, as well as
materials, instruments or supports that serve in the production or distribution
of the goods.

- a second text, taking the
legal form of a Framework-Decision which would complement the
provisions of the Directive and would lay down measures for
the approximation of criminal legislation and cooperation under Title VI of
the TEU.

CONCLUSION: The Commission selected Option 4 because it was the only
one that could offer the Community the solution of a common minimal
criminal penalty.

IMPACT :

Whereas it is
necessary to look at the positive impacts of the measure, it needs to be borne
in mind that, for the most part, they will only result in a reduction in
illegal activities while the absence of a measure would have the effect of
aggravating the consequences.

Improvement
of cooperation between police forces and judicial authorities

The level of
cooperation between the authorities competent to investigate, pursue and
judge counterfeiting and piracy offences will be improved. The authorities
responsible for the application of the law will be granted appropriate powers
of investigation. The establishment of contact points for the exchange of
information will facilitate and accelerate the investigations. The agreement
of competence criteria should prevent any conflicts of competence arising and
the common investigation teams will ensure the cross-border approach that is
vital in the fight against counterfeiting and piracy.

Reduced
crime

Heavier
sanctions with the introduction of minimal levels of maximum penalties, as
well as the improvement in cooperation will make it more difficult and
dissuade infringements of intellectual property rights. The measures taken
have to have a dissuasive character by creating a sense of insecurity among
criminals. These classic criminal law mechanisms will reduce the attraction
of counterfeiting and piracy for criminal organisations and will contribute
to the overall reduction in the levels of the crime.

Impact on
businesses

Reduced levels
of counterfeiting and piracy will naturally be reflected in a drop in the
financial losses of those companies that are victims to these crimes. The
measures to ensure enforcement of intellectual property rights are designed
to protect both large and small companies, in particular those that are
active in design and innovation.

Impact on
employment

The damage
suffered by companies due to intellectual property infringements has an
effect on the volume of jobs their industries can offer, although this effect
is hard to measure accurately. The effectiveness of measures taken under
criminal law will result in the fight against counterfeiting and piracy being
strengthened and, as a consequence, to improve the employment situation in
the Community. To the extent that counterfeiting, in its most serious forms,
contributes, as do other criminal activities, to fuelling illegal work, the
dismantling of criminal organisations using criminal legislation should
contribute to improving the state of the employment market.

Impact on
investment and competitiveness of European companies

Companies
should benefit from an equivalent level of protection throughout EU
territory. This favourable context will reassure companies in regard to the
trust they place in the internal market for developing their creative and
innovative activities in an environment that has been made more secure;

Impact on
tax receipts

The illegal by
nature trade in counterfeit or pirated goods deprives the State of
considerable tax receipts (VAT, customs duties, etc.). The effective combat
of these phenomena will reduce the amount that States would have missed out
upon in terms of tax receipts.

Improvement of awareness of the
criminal nature of intellectual property infringements

The benefit of
the enhanced criminal penalties in the framework defined above is likely to
result in the increased awareness of decision-makers, players and the public.
In the first place, the individual consumer, who has take responsibility for
his actions, has to be made understand that his actions are not without
consequence. In second place, the players have to be made aware of the penalties.
In fact, it has been observed that criminal proceedings on the basis of the
infringement of an intellectual property right are generally rare and the
judgments of limited scope.

2- FOLLOW-UP:

The measure
will be followed up as part of the work of the Forum on the prevention of
organised crime in conjunction with the representatives concerned from the
public and private sectors. Furthermore, the Member States, in collaboration
with the Commission, will have to carry out an objective and impartial
evaluation of the implementation of the measures adopted, by the authorities
of the Member States.